by Dalia Wrocherinsky

In recent months, President Donald Trump has reignited debates around Diversity, Equity, and Inclusion (DEI) by signaling a strong desire to dismantle DEI initiatives in both public and private sectors.[1] The signing of Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” marks a significant step in this direction, signaling a policy shift aimed at curbing affirmative action and race-conscious decision-making in federal contracting.[2] While this executive action appears sweeping on the surface, the true extent of its legal impact is more limited than it may initially seem.

The primary legal framework that governs DEI in the private sector remains intact despite the recent changes. Federal laws such as Title VII of the Civil Rights Act of 1964 continue to prohibit employment discrimination based on race, color, religion, sex, or national origin.[3] Other landmark statutes, including the Americans with Disabilities Act (ADA) and the Age Discrimination in Employment Act (ADEA), also remain fully operative, ensuring protection for marginalized groups in employment settings. [4]

At the same time, recent developments suggest that Trump’s approach is not solely about legislative change but rather about shifting the cultural and corporate mindset away from DEI commitments. His administration’s focus appears aimed at creating a chilling effect on corporate DEI programs, even if legal structures like Title VII remain unchanged.[5] This cultural shift could have longer-lasting impacts than the executive orders themselves, as organizations preemptively scale back DEI efforts out of fear of political or legal repercussions, rather than due to direct legal obligations.

Despite the political rhetoric, many legal experts, including sixteen State Attorneys General, argue that the new executive orders do not override existing civil rights protections and are unlikely to fully dismantle DEI infrastructure in the private sector.[6] For now, the legal changes are targeted and more symbolic than sweeping in scope.

The most significant legal development in this space is Executive Order 14173, signed by Trump in January 2025.[7] This order aims to eliminate the use of DEI-related criteria in federal employment and contracting.[8]  The order mandates that federal hiring and contracting decisions must be entirely merit-based, explicitly prohibiting any form of race-, gender-, or ethnicity-based preferences.[9]

This executive order has several immediate effects. Companies that engage in federal contracting can no longer implement hiring quotas, equity audits, or set goals based on race, gender, or ethnicity without risking contract termination.[10] This reverses policies established under previous administrations, particularly Executive Order 11246, which historically required federal contractors to implement affirmative action plans.[11] The order also directs federal agencies to end DEI-related programs and eliminate any internal training that references race, gender, or equity as factors for consideration.[12] Any DEI training program perceived as promoting race- or gender-conscious frameworks in federally funded entities must end. This action mirrors an earlier Trump-era executive order (since rescinded by the Biden administration) that sought to limit discussions of “divisive concepts” in federal training.[13]

While these changes primarily affect government contractors and federal agencies, the indirect effects will likely continue to ripple through the private sector. Large corporations with significant federal contracts may feel pressured to scale back their DEI initiatives, potentially influencing broader corporate culture.

The executive order introduces varying degrees of risk for different organizations based on their structure, funding sources, and public visibility. Organizations most at risk include federal contractors and subcontractors, large multinational corporations, and non-profits receiving federal funding. Organizations with federal contracts are directly impacted and must ensure that hiring and promotion decisions adhere strictly to merit-based criteria. Failure to comply could result in contract termination or legal action.[14] Further, high-profile corporations—particularly those engaged in government contracting—are under heightened scrutiny. Companies like Boeing, Amazon, and Google have already begun scaling back DEI initiatives, discontinuing DEI hiring targets, and removing DEI-specific benchmarks from their performance evaluations.[15] Finally, non-profit organizations, especially those in education, healthcare, and research sectors, that receive federal grants may need to adjust their DEI strategies to align with the executive order’s requirements. Any program seen as favoring underrepresented groups through race-conscious policies could potentially violate new federal guidelines. New changes to agency regulations, such as those in the IRS relating to tax-exempt status and DEI as an “illegal purpose”, could extend this reach even to privately funded non-profits.[16]

The organizations least at risk are private companies without federal ties and private businesses in states with strong pro-DEI legislation. Smaller businesses and private companies that don’t engage in federal contracting remain largely unaffected by the executive order. They must continue to comply with existing anti-discrimination laws under Title VII and have more flexibility to continue to implement DEI initiatives internally.[17] Businesses operating in states with strong DEI protections, like California and New York, are safeguarded by state laws that uphold DEI initiatives or at least the underlying aim of DEI. State-level legislation may require companies to maintain DEI-related commitments regardless of federal policy changes.[18]

While the Trump administration’s executive orders have reshaped the regulatory landscape for DEI, the broader legal foundation established by civil rights laws like Title VII remains intact. The real impact lies in the cultural chilling effect that could discourage companies from pursuing robust DEI efforts, even in the absence of direct legal constraints. Organizations must understand that the executive order’s reach is limited primarily to federal contractors and agencies. Many private-sector businesses—especially those without federal ties—still have the legal freedom and, arguably, the ethical responsibility to maintain and advance DEI initiatives. For companies committed to DEI, the focus should be on legal compliance while continuing to promote equity and inclusion in creative ways that enshrine the underlying values of DEI. The fight for workplace equity is far from over, and despite political shifts, the legal landscape still offers ample room for meaningful DEI engagement.

[1] See Fact Sheet: President Donald J. Trump Protects Civil Rights and Merit-Based Opportunity by Ending Illegal DEI, The White House (Jan. 22, 2025), https://www.whitehouse.gov/fact-sheets/2025/01/fact-sheet-president-donald-j-trump-protects-civil-rights-and-merit-based-opportunity-by-ending-illegal-dei/.

[2] Exec. Order No. 14,173, 90 Fed. Reg. 8633 (2025).

[3] 42 U.S.C. § 2000e to 2000e-17.

[4] Id. §§ 12101–12213; 29 U.S.C. §§ 621–634.

[5] See Rebecca Schneid, The Major U.S. Companies Scaling Back DEI Efforts as Trump Targets Initiatives, Time (Feb. 22, 2025, 2:46 PM), https://time.com/7260689/us-companies-scaling-back-dei-efforts-trump-targets-initiatives/.

[6] See Nonnie Shivers & Leah Shepherd, State Attorneys General Point to Ways DEI Programs Can Stay Within Legal Boundaries, Ogletree, Deakins, Nash, Smoak & Stewart, P.C. (Feb. 20, 2025), https://ogletree.com/insights-resources/blog-posts/state-attorneys-general-point-to-ways-dei-programs-can-stay-within-legal-boundaries/.

[7] Exec. Order No. 14,173, supra note 2.

[8] Id.

[9] Id.

[10] Id.

[11] Brett E. Coburn et al., Labor & Employment Advisory: The Impact of President Trump’s DEI Executive Orders on Private-Sector, Alston & Bird LLP (Feb. 3, 2025), https://www.alston.com/en/insights/publications/2025/02/trump-dei-executive-orders-private-sector.

[12] Exec. Order No. 14,173, supra note 2.

[13] Exec. Order No. 13,950, 85 Fed. Reg. 60683 (2020).

[14] Exec. Order No. 14,173, supra note 2.

[15] Schneid, supra note 5.

[16] Michele S. Manceaux et al., DEI Executive Orders and Related Litigation, Nat’l L. Rev. (Feb. 20, 2025), https://www.natlawreview.com/article/dei-executive-orders-and-related-litigation.

[17] Christian Olaniran, Private Sector DEI Programs Still Legal Despite Trump’s Executive Order, Maryland AG Says, CBS News (Feb. 14, 2025, 12:18 PM), https://www.cbsnews.com/baltimore/news/maryland-ag-dei-president-trump-executive-order/.

[18] Fair Employment and Housing Act, Cal. Gov’t Code §§ 12900–12996 (West 2023); Unruh Civil Rights Act, Cal. Civ. Code § 51 (West 2023); New York State Human Rights Law, N.Y. Exec. Law §§ 290–301 (McKinney 2023).